And when they do come, he said “they could well settle at something higher than we saw in previous decades.”
Macklem also did not rule out further rate increases, adding that the rapid hikes over the past year or so were necessary to tame inflation, a fight that is still a work in progress.In his speech, Macklem acknowledged that the single price increase having the biggest impact on consumer price index inflation is, running about 30 per cent higher than a year ago.
He added that the bank’s decisions on interest rates will be informed by the fact that the longer the underlying trend remains too high, the harder it can be to bring inflation down. “When households and businesses expect inflation to be above two per cent, buying patterns and corporate pricing behaviour adjust,” he said, adding that reaching sustainable inflation at the target level will require that demand continues to grow more slowly than supply for a period of time.
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